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DECISION No

DECISION No. 45/1999/QD-NHNN5 OF FEBRUARY 5, 1999 PROMULGATING THE REGULATION ON THE WITHDRAWAL OF ESTABLISHMENT AND OPERATION LICENSES OF VIETNAMESE STOCK CREDIT INSTITUTIONS AND THE LIQUIDATION OF STOCK CREDIT INSTITUTIONS UNDER THE STATE BANK�S SUPERVISION

THE GOVERNOR OF THE STATE BANK

Pursuant to the Law on Organization of the Government of September 30, 1992;

Pursuant to Law No.01/1997/QH10 of December 12, 1997 on the State Bank of Vietnam and Law No.02/1997/QH10 of December 12, 1997 on Credit Institutions;

Pursuant to the Government�s Decree No.15/CP of March 2, 1993 on the tasks, powers and responsibilities of the ministries and ministerial-level agencies;

At the proposal of the Head of the Department for Banks and Non-Bank Credit Institutions,

DECIDES:

Article 1.- To issue together with this Decision the "Regulation on the withdrawal of establishment and operation licenses of Vietnamese stock credit institutions and the liquidation of stock credit institutions under the State Bank�s supervision".

Article 2.- This Decision takes effect 15 days after its signing.

Article 3.- The Director of the State Bank�s Office, the head of the Department for Banks and Non-Bank Credit Institutions, the State Bank�s Inspector General, the heads of the concerned units of the State Bank, the directors of the State Bank�s branches in the provinces and cities, the chairmen and members of the Managing Boards, the members of the Control Commissions and the general directors (directors) of the stock credit institutions shall have to implement this Decision.

For the Governor of the State Bank

Deputy Governor
TRAN MINH TUAN

REGULATION ON THE WITHDRAWAL OF ESTABLISHMENT AND OPERATION LICENSES OF VIETNAMESE STOCK CREDIT INSTITUTIONS AND THE LIQUIDATION OF STOCK CREDIT INSTITUTIONS UNDER THE STATE BANK�S SUPERVISION

(Issued together with Decision No.45/1999/QD-NHNN5 of February 5, 1999 of the Governor of the State Bank)

Chapter I

GENERAL PROVISIONS

Article 1.- Objects and scope of regulation

1. In order to maintain the stability and healthiness of the banking system and to strictly comply with the current provisions of law, the State Bank of Vietnam shall consider and decide the withdrawal of establishment and operation licenses of Vietnamese stock commercial banks and stock financial companies (hereafter called the stock credit institutions for short) in the cases mentioned in Article 4 of this Regulation.

2. The withdrawal of establishment and operation licenses stipulated in this Regulation shall be understood as follows:

a/ The withdrawal of stock credit institutions� operation licenses which were granted before October 1st, 1998;

b/ The withdrawal of stock credit institutions� establishment and operation licenses which were granted according to the Law on Credit Institutions.

3. This Regulation stipulates the withdrawal of operation licenses as well as establishment and operation licenses of stock credit institutions (hereafter referred collectively to as the withdrawal of licenses); and the liquidation of stock credit institutions under the supervision of the State Bank in the cases mentioned in Clause 4, Article 3 of this Regulation.

Article 2.- Competence to decide the withdrawal of licenses

The Governor of the State Bank shall decide the withdrawal of licenses of stock credit institutions after having considered the handling plans in order to ensure that such withdrawal does not affect the safety of the banking system and the money depositors� interests.

Article 3.- Handling and liquidation of stock credit institutions

1. Where stock credit institutions have their licenses withdrawn because of their consolidation, merger or transfer of ownership as stipulated in Clause 5, Article 4 of this Regulation, the handling of such stock credit institutions shall comply with the State Bank�s current regulations on the consolidation, merger or transfer of ownership of stock credit institutions.

2. Where stock credit institutions have their licenses withdrawn because of their bankruptcy as stipulated in Clause 6, Article 4 of this Regulation, the liquidation of such stock credit institutions shall comply with the provisions of the legislation on enterprises� bankruptcy.

3. Where stock credit institutions have their licenses withdrawn because they fail to fully meet the operation conditions stipulated in Article 28 of the Law on Credit Institutions as mentioned in Clause 2, Article 4 of this Regulation, the founding members shall have to refund money to the capital contributors after paying all costs related to the establishment of the stock credit institutions.

4. If their licenses are withdrawn in cases other than those specified in Clauses 1, 2 and 3 of this Regulation, the concerned stock credit institutions shall have to immediately conduct the liquidation under the State Bank�s supervision.

Chapter II

SPECIFIC PROVISIONS

Item 1: WITHDRAWAL OF LICENSES

Article 4.- Cases where a stock credit institution shall have its license withdrawn:

1. There�re evidences that the dossier of its application for a license contains information untruthfully declared with intention;

2. It fails to satisfy the operation conditions stipulated in Clauses 1 and 3, Article 28 of the Law on Credit Institutions;

3. It operates for purposes other than those prescribed in the license;

4. It has been compelled to dissolve by the competent State agency;

5. It is consolidated, merged or purchased;

6. It has gone bankrupt;

7. It voluntarily applies for dissolution, though it is capable of paying all debts.

Article 5.- Dossiers proposing the license withdrawal

1. Where the stock credit institution voluntarily applies for dissolution:

a/ A report of the chairman of the Managing Board of the stock credit institution, proposing the withdrawal of its license. Such report must clearly state the real situation of organization and operation of the stock credit institution; the order and procedures for liquidation of property; the debt-payment time-limit and plan; and the matters related to the stock credit institution�s responsibilities in the termination of its operation;

b/ The minutes and resolution of the shareholders� congress on the dissolution. A shareholders� congress shall be considered lawful only when it is attended by a number of shareholders representing three-fourths (3/4) of the institution�s statutory capital; a resolution shall be effective only when it is voted for by a number of shareholders representing three-fourths (3/4) of the institution�s statutory capital, including by at least three fourth (3/4) of the founding shareholders;

c/ The liquidation plan already adopted by the shareholders� congress;

d/ The asset inventory, the statement of profits and losses and the report on the institution�s operation situation for the three latest years (where the stock credit institution has been operating for less than 3 years, the above-said duration shall be counted from the time the institution started operation to the latest point of time); the account balance sheet and financial statement of the stock credit institution by the time of its application for dissolution;

e/ The comments of the People�s Committee of the province or city where the stock credit institution is headquartered;

f/ The report of the director of the State Bank�s branch in the locality where the stock credit institution is headquartered;

g/ Other documents, if so requested by the State Bank.

2. In other cases:

a/ The report of the director of the State Bank�s branch in the locality where the stock credit institution is headquartered, which proposes the Governor of the State Bank to decide the withdrawal of the stock credit institution�s license and suggests handling measures to be applied after the withdrawal of the institution�s operation license;

b/ The records of inspection, to determine the violations or dossiers related to the merger, consolidation or transfer of ownership according to the regulations of the Governor of the State Bank;

c/ The comments of the People�s Committee of the province or city where the stock credit institution is headquartered.

Article 6.- Major contents of a license-withdrawal decision

1. The name and address of the stock credit institution;

2. The reasons for the license withdrawal;

3. The decision�s effective date;

4. The handling measures to be applied after the license withdrawal;

5. For cases mentioned in Clause 4, Article 3, the following contents shall be added:

a/ The names and addresses of the persons who take the main responsibility in the liquidation council of the stock credit institution;

b/ The liquidation time-limit;

c/ The supervision of liquidation and the responsibility as well as powers of the State Bank�s liquidation supervision team at the stock credit institution.

Article 7.- Promulgation of the license-withdrawal decision

1. The license-withdrawal decision shall be sent to the concerned stock credit institution, the State Bank�s branch and the People�s Committee of the province or city where the stock credit institution is headquartered.

2. Within 5 days at most after the signing of the license-withdrawal decision, the State Bank�s branch at the locality where the stock credit institution is headquartered and the State Bank�s branch(es) at the locality(ies) where the stock credit institution opens its branch(es) shall have to announce on a local daily for three consecutive issues the withdrawal of the stock credit institution�s license.

3. Where the stock credit institution�s license is withdrawn because the institution is bankrupt, the operation license- withdrawal decision shall be addressed to the concerned agencies as prescribed by the legislation on the enterprises� bankruptcy.

Article 8.- Responsibilities of the stock credit institution

1. The stock credit institution shall conduct inspection itself, make a report thereon and propose handling solutions to the State Bank for cases mentioned in Article 4 of this Regulation.

2. Within 30 days after the shareholders� congress decides its dissolution, the stock credit institution shall have to compile a dossier as stipulated in Clause 1, Article 5 of this Regulation and submit it to the Governor of the State Bank for consideration and decision (via the State Bank�s branch in the province or city where it is headquartered).

3. The stock credit institution mentioned in Clause 4 of Article 3 shall have to make commitment on its capability of making payments to the creditors and take self-responsibility for its liquidation. Within 5 days after the Governor of the State Bank signs the decision to withdraw the license, the institution shall have to announce on a centrally-run newspaper as well as the newspapers run by the localities where its head office and branch(es) are located for 5 consecutive issues its dissolution, order and procedures for the liquidation of property, debt-payment time and time-limit and its lawful representatives in the liquidation process.

4. Right from the time the license-withdrawal decision takes effect, the stock credit institution shall have to:

a/ Immediately terminate all capital-mobilizing and -lending activities;

b/ Cease the calculation of payable interests or interests to be collected before the payment time-limit; liabilities and assets of the credit institution which is considered as no longer operative;

c/ Completely terminate the transfer of shareholders� stocks. In case of its voluntary dissolution, the stock-transfer termination shall be efffected from the time the shareholders� congress decides such dissolution;

d/ Conduct the liquidation in strict compliance with the current provisions of law.

Item 2: LIQUIDATION OF STOCK CREDIT INSTITUTIONS

Article 9.- Liquidation council

1. If its license is withdrawn in one of the cases mentioned in Clause 4, Article 3 of this Regulation, the concerned stock credit institution shall have to immediately set up a liquidation council and conduct the liquidation under the State Bank�s supervision.

2. The liquidation council of the stock credit institution shall comprise the chairman and vice chairmen of the Managing Board, head of the Control Commission, general director (director), chief accountant and a number of other members who are selected from among the members of the Managing Board, the Control Commission, major shareholders� representatives and major money depositors at the proposal of the stock credit institution�s Managing Board and decided by the director of the State Bank�s branch in the concerned locality.

3. The chairman of the Managing Board or a vice-chairman of the Managing Board (in cases where the chairman is absent) shall be the chairman of the liquidation council. In cases where the chairman and vice-chairmen of the Managing Board are all absent, the Managing Board shall meet to elect one of its members as the chairman of the liquidation council.

Article 10.- Responsibilities of the liquidation council

1. To make a list of creditors and debtors, as well as their respective debt amounts by the time the license-withdrawal decision takes effect and a list of the stock credit institution�s property, for handling, which shall include:

a/ People�s deposits;

b/ Deposits of credit institutions, economic organizations, socio-political organizations, other organizations and individuals;

c/ Property rented or borrowed from credit institutions, economic organizations, other organizations and individuals;

d/ Payment commitments and obligations such as wages, taxes, etc.

e/ Loans, securities and mortgages;

f/ Pecuniary property, including cash (domestic and foreign currencies), precious metals and stones, deposits at the State Bank and other credit institutions and valuable papers;

g/ Capital contributions and shares purchased at credit institutions, economic organizations and other organizations;

h/ The leased and borrowed property;

i/ Other kinds of property of the stock credit institution.

2. To work out the liquidation plan and implement it after it is approved by the director of the State Bank�s branch in the locality where the stock credit institution is headquartered and seek all possible measures to recover the stock credit institution�s loans and property, with a view to making payments to the creditors.

3. To organize the liquidation of the stock credit institution in accordance with the current provisions of law. All the stock credit institution�s revenues must be used to make payments for the creditors according to the order of priority stipulated in Article 11 of this Regulation.

Article 11.- Order of priority for making payment to the creditors

1. Sums of money provided by the State and other credit institutions, especially in forms of loans or deposits, aimed at supporting the payment of the population�s deposits in the period subject to special control (if any);

2. Money deposited by different people;

3. Debts of wage, severance allowance and social insurance for laborers as prescribed by law and other interests stipulated in the signed collective labor agreement and labor contracts;

4. Tax debts;

5. Fees and costs prescribed by law for the liquidation of the stock credit institution;

6. Debts specified in the list of creditors;

7. Shareholders� interests. The shareholders� interests shall be settled only after all obligations towards the creditors have been discharged. The remaining value shall be distributed fairly by the stock credit institution to the shareholders according to the latter�s capital contribution percentages.

Article 12.- Ending the liquidation

1. The stock credit institution shall end the liquidation in the following cases:

a/ It has paid all debts to creditors;

b/ It is purchased by another credit institution which agrees to pay all debts to the creditors of the stock credit institution;

c/ The liquidation time-limit has expired according to the regulations of the Governor of the State Bank (including the extended duration, if any);

d/ It is incapable of paying all debts to the creditors.

2. Upon the liquidation completion, the liquidation council of the stock credit institution shall have to make a report thereon, which shall serve as basis for the liquidation-supervision team and the director of the State Bank�s branch to make a report and submit it to the Governor of the State Bank, proposing the latter to issue a written approval of the liquidation completion in order to fill the procedures for termination of legal person status of the stock credit institution.

3. In the course of supervising the liquidation, if deeming that the stock credit institution is incapable of making full payments to the creditors mentioned in Point d, Clause 1 of this Article, the liquidation-supervision team shall have to give its written comments so that the director of the State Bank�s branch reports the situation to the president of the provincial/municipal People�s Committee and propose the Governor of the State Bank to end the liquidation in order to fill the bankruptcy procedures according to the provisions of the legislation on enterprises� bankruptcy.

Article 13.- Liquidation costs

All costs incurred in the liquidation shall be borne by the stock credit institution that has its license withdrawn.

Item 3: SUPERVISING THE LIQUIDATION OF STOCK CREDIT INSTITUTIONS

Article 14.- Liquidation supervision team

1. The Governor of the State Bank shall decide the establishment of a liquidation supervision team in order to supervise the liquidation of a stock credit institution (liquidation supervision team for short), appoint the team leader and clearly define the tasks and powers of the leader as well as members of the team.

2. The liquidation supervision team shall be composed of at least 3 members recommended or decided, if so mandated, by the director of the State Bank�s branch in the province or city where the stock credit institution is headquartered. Where the stock credit institution has a branch in other locality, the director of the State Bank�s branch in the locality where the stock credit institution is headquartered shall send an official dispatch to the State Bank�s branch in the locality where the stock credit institution opens its branch, requesting the latter to appoint its official to join the liquidation supervision team.

3. In cases where the Governor of the State Bank appoints another credit institution to take part in the supervision of liquidation of the stock credit institution, the appointment of members of the liquidation supervision team shall be proposed by the general director of the concerned credit institution and decided by the Governor of the State Bank.

4. The leader and members of the liquidation supervision team shall be answerable before the director of the State Bank�s branch in the locality where the stock credit institution is headquartered and before the Governor of the State Bank for the performance of their assigned tasks.

Article 15.- Criteria, conditions for members of the liquidation supervision team

1. Being the cadres of the State Bank�s branch, working in such sections as the Inspectorate, the Section for Management of Credit Institutions or the Section for General Affairs (for places where a Section for Management of Credit Institutions is not available), the Credit Section, the Foreign Exchange Section or the Accountancy Section; or being cadres of the credit institutions designated by the Governor of the State Bank to participate in the liquidation supervision.

2. Having banking knowledge and experiences and having worked in the banking field for at least 3 years.

3. Not being shareholders, parents, spouses, offsprings, blood siblings of members of the Managing Board, the Control Commission, the general director (director) of the liquidated stock credit institution.

Article 16.- Tasks and powers of the liquidation supervision team

1. To direct the stock credit institution to add members to the liquidation supervision team as stipulated in Clause 2, Article 9 and elaborate the liquidation plan according to the provisions of Clause 2, Article 10 so as to submit it to the director of the State Bank�s branch for approval.

2. To direct and supervise the stock credit institution in inventorying all of its existing property; to request the stock credit institution to invite its debtors and creditors to come for debt comparison so as to determine the institution�s payment capability and sources of capital for debt payment.

3. To request the liquidation council of the stock credit institution to report and supply documents, information on the organizational and financial situation as well as the general situation of the stock credit institution at the time its license is withdrawn and the matters arising in the liquidation process.

4. To supervise the whole process of liquidation of the stock credit institution.

5. To submit periodical or extraordinary reports to the director of the State Bank�s concerned branch, the president of the concerned provincial/municipal People�s Committee and the Governor of the State Bank on the process of liquidation of the stock credit institution. In case of necessity, to make documents, proposing the relevant agencies to support the stock credit institution in recovering its capital and property and dealing with customers who deliberately delay the debt payment, thus causing material losses to the stock credit institution.

6. To have the right to propose the director of the State Bank�s branch to decide the temporary suspension of activities of the liquidation council�s members who deliberately breach laws, fail to comply with the liquidation plan or commit acts of scattering properties, refusing to perform their responsibilities and obligations; for serious cases, to make documents, proposing the law enforcement agencies to handle the violators.

7. To propose the director of the State Bank�s branch, the concerned local People�s Committee and the Governor of the State Bank to handle matters arising beyond its competence as well as forms of handling of the stock credit institution upon the liquidation completion in cases mentioned in Article 12 of this Regulation.

8. To supervise the stock credit institution in filling the procedures to terminate the latter�s legal person status by the end of the liquidation.

9. The liquidation supervision team shall be subject to the personal direction of the director of the State Bank�s branch in the locality.

Chapter III

RESPONSIBILITIES OF THE UNITS ATTACHED TO THE STATE BANK

Article 17.- Responsibilities of the State Bank�s provincial/municipal branches:

1. The State Bank�s branch in the locality where the stock credit institution is headquartered shall:

a/ Supervise, inspect and propose the Governor of the State Bank to consider and decide the withdrawal of the stock credit institution�s license;

b/ Guide, receive dossier, and consider and evaluate it within 30 days after fully receiving it, then make a report thereon and submit it together with the dossier (three sets) to the Governor of the State Bank so that the latter may consider and decide the withdrawal of the license of the stock credit institution that voluntarily applies for dissolution according to Clause 7, Article 4 of this Regulation;

c/ If the stock credit institution�s license is withdrawn in cases mentioned in Clause 4, Article 3 of this Regulation, the State Bank�s branch shall have to appoint eligible, qualified and capable officials to participate in the liquidation supervision; and assume the prime responsibility in maintaining contacts with the functional agencies in the locality for handling matters arising in the course of liquidation of the stock credit institution;

d/ Within 5 days after signing the license-withdrawal decision, the director of the State Bank�s branch shall have to issue a written approval of the list of persons to participate in the liquidation council of the stock credit institution as its members (as stipulated in Clause 2, Article 9);

e/ To submit to the Governor of the State Bank for consideration and handling matters arising beyond its competence.

2. Responsibility of the State Bank�s branch in the locality where the stock credit institution�s branch is located:

a/ To give timely comments to the State Bank�s branch in the locality where the stock credit institution is headquartered, when detecting that the stock credit institution�s branch in the locality commits violation(s), in order to coordinate with the latter in the handling of such violation(s);

b/ To coordinate with the State Bank�s branch in the locality where the stock credit institution is headquartered in the liquidation of such stock credit institution.

Article 18.- Responsibility of the units at the State Bank�s head office:

1. The State Bank�s Inspectorate:

a/ To guide and direct the State Bank�s branches in the provinces and/or cities to inspect and propose the withdrawal of licenses of stock credit institutions. In case of necessity, to directly propose the Governor of the State Bank to withdraw the stock credit institutions� licenses;

b/ To consider and evaluate the real situation of operation and financial capability of stock credit institutions as mentioned in Article 4 of this Regulation.

c/ To assume the prime responsibility in coordinating with the relevant units in counter arguing the request for the withdrawal of licenses of stock credit institutions.

2. The Department for the Banks and Non-Bank Credit Institutions:

a/ To guide the State Bank�s branches and stock credit institutions in the implementation of this Regulation;

b/ To coordinate with the concerned units in evaluating and submitting to the Governor for decision the withdrawal of licenses of stock credit institutions when receiving such written proposals attached to the relevant dossiers from the State Bank�s branches in the localities where the stock credit institutions are headquartered or proposals from the State Bank�s inspectorate;

c/ To suggest the handling of matters related to the withdrawal of licenses and liquidation of stock credit institutions.

3. The Legal Department:

a/ To revise the legal documents and regulations issued by the banking sector and related to the license withdrawal, liquidation and supervision of liquidation of stock credit institutions so as to propose the Governor of the State Bank to make necessary amendments and/or supplements thereto, thus making them conform to the current provisions of law;

b/ To assume the prime responsibility in coordinating with the relevant agencies in handling legal matters in the process of liquidation of stock credit institutions.

4. Other units shall have to consider and report to the Governor of the State Bank on matters related to the withdrawal of licenses of stock credit institutions according to their respective functions, tasks and powers.

Chapter IV

IMPLEMENTATION PROVISION

Article 19.- Any amendments and/or supplements to this Regulation shall be decided by the Governor of the State Bank.

For the Governor of the State Bank

Deputy Governor
TRAN MINH TUAN